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Entrepreneurship in Society. >> Jeanan Yasiri: This is
through the University of ItWisconsin School of Humanred
Ecology.
As we begin today, I'd like to I'm Jeanan Yasiri.
supporting this course, the UW extend thanks to our partners in
the UW College of Engineering Ofor their technical supports,
and financial support from the
which is committed to advancing Ewingacademic education indation
entrepreneurship. Additionally, we'd like to thank
our media partners, Wisconsin Public Television and their
University Place crew for taping
I'm quite pleased to introduce today's lecture.
Seema Gohill and our special guests today,
with Grameen America Katherine Rosenberg
Grameen America was founded by based out of New York.
Yunus, who was awarded the Nobel economics professor Muhammad
ground-breaking work on Pdeveloping a microfinances
movement that provides
financially empower low-income affordable microloans to
The organization's vision is to help create a world free of
poverty.
individual with a dream can Thachieve affordable financialny
products regardless of income,
credit history, education or regardless of their previous
And they foresee a world where business experience.
empowered to lift themselves out burgeoning entrepreneurs are
determination to forge better olives for themselves and theird
families. Katherine Rosenberg, with
Grameen America, is director of evaluation and education.
Early in her career, Katherine
volunteer in Senegal where she served as a Peace Corps
numerous health education and dcommunity developmented
initiatives, including
cooperative pharmacy. estaKatherine holds degreesated
from Union College
a master's in public health ifrom Columbia University.as
Seema Gohill is Grameen America's director of finance
and development.
has been in corporate finance. And her professional background
worked in the investment banking Prior to joining Grameen, Seema
She holds a bachelor's in finance from the University of
Miami.
entrepreneurship and the As we explore social
communities across the world to be entrepreneurial despite their
current income and wealth status, understanding
microfinance and microlending is
that equation. a very important component to
our Grameen guests starting So plewith Seema Gohill.coming
[APPLAUSE]
Seema Gohill: Thank you for that great introduction,
and thank you to the university for hosting us here today.
Katherine and I both are very excited to talk to you today
about microfinance. We'll talk a little bit about
the history of Grameen Bank, and
and how a simple concept has the Grameen America specifically,
And it's not just by financially power to change so many lives.
developing world but it's by empowering people in the
right here in the US as well. finWe all think of poverty,le
we all think of health issues,
All of these sound like huge we all think of diseases.
daunting to actually change, and economic problems that seem so
challenge to change all these it seemsthings.uch a big
But little concepts actually do have the power to change lives
globally. And hopefully by the end of this
presentation we'll prove to you that this can be done.
I think most of you may know
He's actually been dubbed the Prfather of microcredit..
He started the concept of microfinance with a very, very
simple concept. In 1976 he was a professor at
the University in Bangladesh, and he went out in the villages
one day and what he found is
42 borrowers who owed $27 thatto payday lenders.ple,
They were stuck in this virtual cycle of poverty because the
payday lenders were charging
and thus they could never break them eout of that cycle. rates
What he did was just take out $27 from his own pocket, give it
to them and said there you go,
You can now build your you're now free from them.
These were all people that lived businesses.
Nobody ever found them credit in tworthy.ages.
No bank would lend to them. And he basically never expected
a return from them. What he found was that
all 42 borrowers
As an economic professor he was paid theshocked.7 back.
He actually went out and redid
was people repaid him. this, and what he found again
global microfinance movement. Professor Yunus was awarded thee
Nobel Peace Prize in 2006 based on this concept.
What's remarkable is that that $27 has now grown to a bank
that has now lent out $8 billion
borrowers in Bangladesh. and serves eight million
people, meet on a weekly basis. ThAll of them attend weeklyion
meetings where they make
their principle and they also integet financial education.own
Every week, this bank lends out $100 million and gets
$90 million back in repayments. All of these loans are as small
as $250.
think of the actual scale of the This is remarkable when you
What we've done now is actually replicate this program in the
US. So as you can see, there are a
number of replication projects
Specifically, there's eight projects that are staffed by
Grameen senior managers that
around the world to implement wthe microfinance project.s
Grameen America is actually one of them.
In 2006, when Professor Yunus won the Nobel Peace Prize,
people said it's great, it works
it will never work in the US. And his response to that was
why not?
everywhere. Everybody deserves a chance,
everybody wants an opportunity
themselves. So what he did was actually
staff one of his most senior
since the beginning, and he actually came to the US andm
started the lending program in
Since then we've grown a lot, and Katherine will go through
the program and the model.
like to play for you that kind We have a short video that we'd
of our operations before we jump of goes through the first year
I was teaching economics in one of the universities in
Bangladesh. I'm teaching in my classrooms
about the five-year plans with
billions of dollars that are the millions of dollars or
lives of the people. being invested to change the
less than a dollar a piece and Here next door, people needed
them. So I went to the local bank to
arrange loans for them and the
money to the poor people because bank manager said he cannot lend
I said I'll become a guarantor they are not credit worthy.
aand see whether this is true.le
Our workers started giving loans
A total amount of $27.
Today, it grew into a big bank. Right now we give loans
to seven and a half million borrowers in Bangladesh,
no collateral, no guarantee,
97% of them are women, no legal papers.
to change their life. aThey move out of povertyn
consistently. We can create a world absolutely
free from poverty.
After the Nobel Peace Prize suddenly everybody's willing to
listen, suddenly all the doors
been banging for many, many are open, theyears. that we had
Thank you so much.
Looking back, the guy who lends money, less than a dollar,
coming to Malibu... [LAUGHTER]
Telling them the importance of money.
[LAUGHTER]
I've got to take advantage
this opportunity may not last of this opforever.y, because
[INDISTINCT TALKING]
Yeah, you wrote that book. >> How you doin'?
I know your face. >>> You saw it?.
I put it... >> Oh, my God!
Thank you!
Thank you. >> I never shook your hand...
I would like to add that the >> All right, have good day.
New York Times book is number 18 on next week's
It can work everywhere. Despite the fact this is
New York City, this is the
but still there are things capitol of capitalism itself,
We have borrowers tof this program already here.y.
[APPLAUSE]
Congratulations to you. You have been in the forefront
of a big, big history that you are going to make.
It's almost like landing
Your small step will be a giant step for all of America because
if your program, you make it
the door for many, many millions successful, then this will open
not have this service from the of people in this country who do
You will be opening this door for the rest of America.
All right, go!
Two dollars in her savings [CHEERS AND APPLAUSE]
repayment. account, and $66 for her loan
and I was able to purchase >> I got two small mixers,
my business on a larger scale. a big mixer, so I could do
I bought my first machine to clean the carpets.
It was $1,100.
I bought an ice cream trunk. >> Thank you very much.
happening exactly the way >> Grameen programs work inare
Bangladesh and how women benefit
been suffering because all their from that, and how women have
return because they didn't have the money to invest and carry on
at their own terms. Now having this money from
Grameen program, they can control their own lives.
They can change their own lives with their own initiatives.
Katherine Rosenberg:
our borrowers are a little So, Professor Yunus and
but one of the reasons we're challenging of an act to follow,
saw such a need in the here is because Professor Yunus
microfinance. Everybody was incredibly
supportive of what happened in
replication projects throughout the world but nobody believed
that something like this
City. acSo one of the things we werek
actually talking about earlier
need and there is such today is how there is such a
US and how so few people significant poverty here in the
oftentimes look abroad before we recognize that need and how we
If you can imagine, I'm sure look in our own backyard.
census updates of the increases in poverty due to the economic
recession, but one thing that people don't often look at is
the unbanked and how incredibly important that is.
So one in five Americans, one in
banking services. So if you look at this room, and
we think of it as a class of a
only 20 people in this room, if we're thinking of a microcosm of
the United States, only 20
a savings account or a checking paccount or can walk into yourr
local bank and ask for a loan.
when you're trying to think Tabout growing businesses and
this budding entrepreneurial
much founded upon. spirit that America's is pretty
United States is what we call Our bigpayday lenders. in the
Payday lenders are individuals
loans and it's easy money, it's on teither a check casher oring
somebody who says hey, yeah,
or I'll give you $500 but they're actually charging
300% interest rate. So that's the same kind of
situation that Professor Yunus
'70s where people that want to saw in Bangladesh in the late
because they've taken out this start a business are now trapped
Oftentimes they don't have the loan.
in this room have and they think same education that many of us
Sure I'll give you $1,000 and all I have to do is pay $20 a
week. But in fact, they're tied to
that loan and they can never
they're tied to just paying down grow their business because
grow to the point where they're thepaying down the principle.er
So what we've done is Professor Yunus started and he took his
program of microfinance and this
get into in a second and he put peer leit down right in we'll
Jackson Heights, Queens.
we focus on. We have four main programs that
to capital, which is the most The firsobvious. access
The second one is financial literacy.
The third is building credit, and the fourth is access to
savings.
holistic approach to alleviating So all of these, it's this
And I think it's important to say that we don't think that
this is a panacea.
poverty overnight, but this is a This isn't going to solve world
entrepreneurs out there that great product for some
So let's talk a little bit about have had no access before.
This is one of the quirky things the model.
Yunus has sort of coined as the thamicrofinance peer lendingsor
system. And it's different.
And a lot of people sort of claim they do this lending
model, but what's unique to Grameen and Grameen America is
that this is exact model we're
run in Bangladesh. about to go through that they
here in the United States. We picked it up and we put it
it. WAnd everybody said that this
model is why we would fail
the United States. because this would never work in
Mine? So can I a>> Yeah.our name?
Victoria. >> So, say Victoria walks into
our field office in Jackson Heights, Queens, and she says,
hey, I really want a loan.
that's great, let's talk about And we're going to say, okay,
We're going to ask Victoria whether she lives below the
poverty line. Not making any generalizations
to Victoria but for purposes of the conversation let's assume
she says she does.
below the poverty line, do you And we'll say, okay, you live
Hopefully she's going to say want to start a business?
Assuming those two questions are yes.
great. yes, we're going to say this is
But Victoria can you turn around This is a wonderful first step.
of your friends or acquaintances in your community and ask four
also want to start a business? or friends of friends if they
her to go out into the community And then we're going to force
So we'll never just lend to and build Victoria.f her own.
We're only going to lend to groups of five.
And this is a huge social component of the Grameen system.
It really builds peer pressure
Victoria is not going to jump intinto a group and this loanays
process with like Joe on the
business aspirations, can't cornerrepay his loan.has no
She knows her community better
We're not asking Victoria for collateral, we're not asking her
for a credit score, but we are
five. aSo then Victoria has her groupf
of five, say it's this first
The group of five comes in, they row-ish.
they all want a loan, they all all fall below the poverty line,
It's important to note that our maximum first time loan is
$1,500. So that's larger than we see in
Bangladesh but also, and we'll
what people do with that loan, talk a little bit more about
into that mortgage crisis that but we're trying not to get back
of. We really want to give people
just the amount of credit that
into debt that they can never they needget out of.rcing them
So we've got this group of five,
line, they all want to start a they all live below the poverty
do is we put them through bua five-day continuous groupwe
training. So that group of five is going
to meet for five consecutive
day. days for an hour every single
our staff that we call in AndGrameen lingo our centerith
managers which is essentially a loan officer.
Every day, we're very focused on
So we're going to ask them to learn about the interest rate.
We're going to ask them to learn
program which are a lot. about the requirements of the
get them to talk to each other, think through their businesses,
what are they going to do.
program is the savings model. So during that five-day training
period everybody's going to walk
York we're either working with to our local bank, which in New
they're all going to open a Citibasavings account.e, and
And for many of our borrowers this is a brand new phenomenon.
Most of them fall into that four
access to a bank before. and five that have never had
account, and in the long-term they feel much more comfortable,
we hope, walking into a formal
we're helping them develop this bankingrelationship.because
So they've got a savings
five consecutive days, they're account, they're meeting for
learning all the details of the mweird Grameen model, and as are
part of the savings program everybody is going to deposit $2
every single day and they're
day one. going to give it to Victoria
going to go home with $10. So on day one, Victoria and
back with that same $10, and The next day she's going to come
another $2. So the next day, sorry, what's
your name?
Nick's going to take $20 >> Nick.
back the third day and then homNicks going to have $20.ome
Sorry, what's your name?
Thank you. >> Ashley.
So we're going to have $30 the You guys could have those, too.
so on until at the end of the nexweek everybody's got $10. and
But it also builds this trust within the group where all the
sudden everybody gets to know each other an a different level
and they all, it's the first
So after that first five days of step in building trust.
get the loan. It depends on what they're going
to use the loan for.
idea of what they want that loan But people need to have an exact
to buy an industrial mixer. for, And the mixer is $800. want
And they're going to show us
first two people that are elected by the group get that
$800. They have to show proof of
purchase and receipt within the first seven days of receiving
that loan, and then once they start paying back, the other
three people in the group are going to receive the loan as
well. So then for the next 50 weeks of
the year that group meets every single week in a borrower's
home. So we're not asking our
borrowers to come to us, we're
And again it's important to remember that this is actually
in New York City, this is not in
or wherever. the rural villages of Bangladesh
meeting with these groups every But our single week.ers are
And what happens in these groups
principle of their loan, they're is that everybody's repaying the
then they're depositing a alminimum of $2 in savings.and
And then informally they're talking about sort of financial
education.
probably go to the next slide, So what we do, and we can
have a formal financial what we docurriculum.t actually
So we're not going to say on
accounting, week two is weekbudgeting, week three ish of
marketing.
found that the borrowers And Professor Yunus has really
their communities better than we actually know the businesses in
communities. could ever know their
know the market but a lot of They know the business, they
different. times they're all a little
thing, another person in the So one person may know one
kind of come together to teach group knows another and they all
So licensing is a huge challenge each other.
So we have a lot of food carts. One borrowers may come in one
week and say, hey, I just got this great license for my food
cart. I'm selling it in this corner of
Jackson Heights, Queens, and
was just trying to figure out anohow to get a food license.y I
So then we create this
It's an organic conversation conversation.
us teaching them things that within the group where it's not
know, but it's them teaching they may or may not want to
And we feel like, and Professor Yunus feels like it's a much
more sustainable form of
community groups to work development and forcing these
network of a community. The access to capital is really
the hook that gets everybody in,
lot more pieces to the program. Savings, as we talked about, is
another powerful piece. The other piece is financial
literacy and then credit
So credit building is something that's specific to the United
States. They don't have credit ratings
or credit scores in most other
Bangladesh. And what was news to me when we
started researching a lot of
borrowers or individuals that thidon't have a credit scorests
upwards of $3,500 a year, either
or if your credit score is bad. iSo what I mean by it costs youe
up to $3,500 a year is if you're
account with AT&T, you walk into going to open a cell phone
say, hey, I want the family plan the cell phone store and you
iPhone. aAT&T is going to say, okay,e
we'll sell you whatever you want, but then they ask for all
those things like your social security number and your address
and all those things. And they're doing a credit
check, actually, in the background.
And if your credit is poor or if
going to say, all right, well we you don't have credit, they're
The same thing happens with when need a $250 deposit.
apartments in New York City and theI'm sure anywhere in theent
country.
credit is. They want to know what your
a reliable renter. They want to know whether you're
forced to put down all these So all of our borrowers are
don't have the cash to do it. So we're reporting all of our
borrowers' repayments for their small loans to Experian, which
is one of the three major credit
And what we've found is that for agencies in the United States.
who don't have a credit history, the majority of our borrowers
credit up to 650 points after just six months of working with
Grameen, which gets them out of the AT&T deposit, gets them out
of opening utility bills and
So that's actually saving them renting apartments.
six months. mThey're are obviously some off
our borrowers who have adverse
little bit longer to improve credit history which is takes a
But through these weekly that credit.
program focus on credit as one conversations and having our
really starting to help people of the main components, we're
had no idea what credit was before I really started thinking
about it. It's certainly not a common
piece of education that we learn
So those are kind of the big fun about.
Just to talk a little bit about some of our borrowers, as I
mentioned all of our borrowers
line. The federal poverty line is the
same in any US city, whether
you're in rural Arkansas, it's you're in New York City, whether
people in your family. all dictated upon the number of
this is sort of the one of the So if you're a family of four,
a family of four, you have to make below $22,050 a year whiche
is pretty unbelievable, especially living in New York
City. If you guys have ever been
there, it's sort of a pricey
But many of our borrowers live place to live.
Last year we found that our faaverage income from ourne.
borrowers was just under
The majority of them, I think about 90%, are single moms.
Most of them with three to four school aged children.
So they're trying to juggle their kids, their finances, most
of them have at least one part-time job if not two,
although most of those are
line. aA lot of people wonder what do
our borrowers actually do with
amount of money. $1,500 which seems like a tiny
The majority of our borrowers are running salons or food carts
or doing sort of like an AVON model.
One of my favorite success
woman who came to us, and she swas one of our first borrowers
in 2008.
was below minimum wage, and she Awas sort of just scraping by.at
She had two kids, she was married and she lived in Jackson
Heights.
been working at children's And she came to us and she had
and cakes and stuff like that. birthday parties making cupcakes
like to buy an industrial mixer. And she said, hey, I'd really
and everybody had their own individual businesses and so we
gave her a loan for just under a
So her first purchase was an thousand dollars.
mixer that she put in her home industrial commercial sized
And she started growing her business day by day and
eventually, we're now at three
fourth loan, I think, and she's been able to leave her part-time
job, open a store front in
I mean it's tiny, it's maybe Queens, she has her own bakery,
So it's not a huge bakery, but like the size of this area.
This is her main job. She's employing two people and
this is her entire business and she's done this all starting
with like a $900 loan, which is amazing, and that's one of our
wonderful success stories that
And for a lot of people it takes we like to brag about.
out of that poverty line. So certainly we have borrowers
that have been with us since
loans and they're still growing 2008 atheir businesses.taking
There's a spectrum of success,
to the process, and sometimes buit's just luck, but you caned
really make your business grow
got your kids graduating from high school and they're going to
college and it's just this long trajectory of poverty
alleviation.
operations. SAs we said, we started in 2008t
in Jackson Heights, Queens. We've since expanded to four
different locations.
Queens, we're also in Brooklyn, New York, and we're in sort of
upper Manhattan which is also servicing the south Bronx.
So we've got three branches in
We've also opened a fourth New York City.
summer, summer of 2009. brWe've grown to nearly 5,000st
borrowers in just under three years.
We've lent out
and we've collected savings or about $11.5 million in loans,
savings of just over $600,000. our borrowers have deposited
just a couple of years. So we can't wait to see kind of
what happens over the next five years as you guys get to know
microfinance and get more excited and help to spread the
word. This is just a different form of
showing kind of our success.
exciting thing that we look at Jobs created is another really
borrowers hire one person and some don't, but in this economic
recession it's really exciting
actually growing their to see that our borrowers are
they need additional employees. So they really are becoming the
small businesses of America.
of wanted to talk you to guys Sabout was this idea of sociald
business. Has anybody heard of social
business before or this new concept?
Yes? No? Maybe? So Professor Yunus is really, he
initially really pushed this
he wants to push now is the idea world of microfinance, but what
So social business is what of social business.
on track to be where you can essentially Grameen America is
business. He's not saying everybody has to
be a 501(c)(3) and everybody has
is that you take investors that twant to give you money so youa
can help build your business. And they can certainly take
their initial investment out
but they're not going to take dividends, they're not going to
make a profit off of their
And then as a social business, investment.
become sustainable we're not as Grameen America, once we
we're not going to go public going to start paying dividends,
organizations are starting to do like a lot of other microfinance
with the interest that we charge but what we're going to do is
operations which makes us sustainable and second all the
profit we make on top of that is
back into our business so we can actually just going to be folded
like Madison or we can open in expand, so we can come to places
There's a huge demand across the the San Francisco Bay area.
microfinance. And once we become sustainable,
that's when we'll be able to
So some of our challenges to expand.
is why we love to engage with you guys to see if you have any
ideas, is it's really a scale question.
So the faster we scale, the faster we can become
sustainable.
world we actually want our loan Smoney out in the world because
if our money is out, it's making
So that's what we want. And in order to get more money
out in the world, we have to
And how do we do that effectively is something, it's
certainly a challenge to us in
sustainable within the next 12 the US, and we're on track to be
news, so that would be probably around year five in total, but
how do you make that happen even
Some of the ideas that we're faster.
Professor Yunus talks about is exploring and some of what
terms of becoming a bank. So one of the big differences
between Grameen Bank in Bangladesh and Grameen America
is that Grameen Bank is actually
So they can loan out that savings and those deposits that
borrowers are making. Whereas, we as Grameen America,
right now we aren't a deposit-taking institution.
And that's really just because
United States. it's a complete challenge in the
different here than they are Regulations are obviously
We haven't been able to tackle overseas.
looking at. tOther pieces, other ways tore
become sustainable is to
those savings deposits that our borrowers are depositing into
Citibank and Capital One, how can we leverage those savings to
actually loan those back out
back out. iSo these are a lot of these
challenges that we're facing, and what we love to get you guys
to start thinking about is how
Even whether it's microfinance do you reach scale?
business? What Grameen Bank has done in
Bangladesh is they have tons of social businesses.
So they have Grameen healthcare,
programs, they have Grameen tagricultural programs andn
they're all social businesses.
make a profit and you can start a business that actually solves
the world's problems and makes
place. the world a little bit better
you guys starting social So hopefully we'll have some of
Do you businesses soon.
[INAUDIBLE] h>> I know that we?
had a question down here.
Hi, guys. Thank you so much from coming
all the way from New York.
here, and on behalf of the class It's a real pleasure to have you
My question for you is I noticed I just want to say thank you.
America is a 501(c)(3) and that you guys are taking donations
from the public, but you guys are also making interest on all
of your loans, which do you see as being more important for your
business and which do you see being more important like 10-15
years from now? >> Seema Gohill: Sure, I guess
I'll tackle that. I think it's actually a
combination of both.
sustainability. Until we get to that point,
which is basically year five, where when I say sustainability
it's actually at the point where
operations. So today our largest operational
cost is actually the salaries of
They're actually the our loan officers.
borrowers. face-to-face person with the
working out in the community, and so it's basically covering
their costs and covering the
It takes about five years for costs ofeach branch.g model.
Each branch is about 4,000
So for each branch to become borrowers.
to generate enough interest sincome takes about five years.o
Until we get to that point, we
need to rely on grants, but willafter that point we canwill
definitely, like Katherine said,
continue to scale from there. rein>> I have a question. and
I was wondering if you could
different about promoting this just address the things that are
compared to places, like why did model in the United States
able to work in the United people say that it wouldn't be
Katherine Rosenberg: Sure, States?
trying to touch upon is the idea so I think sort of what we were
is really a community-building this peer lending system
And everybody looked at New York exercise.
the world that you're going to City and said there is no way in
find four other people, second get, first of all, one person to
are going to actually meet every of all that those five people
For some reason in Bangladesh that just seems like such a
simple idea.
ago. Although, that was like 30 years
thought that this peer lending Whereas now, people just never
And that's one of the interesting pieces of the peer
lending model is that there are a lot of organizations that have
brought microfinance and a peer lending model to the United
States, and they claim that they're doing a peer lending
model, which they very well may do, but they say, hey, we
actually don't think this is
only going to be groups of three actually going to work, it's
every other week and they tweak aall of these pieces of thet
model.
forgot to mention sort of one of And those are the groups, I
is that we have less than a our mpercent default rate.which
So if you think of that and the world commercial banks,
especially with the financial crisis, banks are like, I don't
even know, like 80% or 20%
rates. default rates, 15% default
working, and I feel like the So there's something that's
But people were really skeptical proof is sort of in the numbers.
get individuals working together of whether we would be able to
And then one of the other cool in these community systems.
is that there is this pmicroeconomy that's going on.em
So people aren't going to the Gap and J Crew, they're actually
buying from each other. So you've got this group of five
and Seema says to Victoria, hey,
done and Victoria says, oh, Ithere's this other Grameenr
borrower who just started a salon service.
So then Seema goes to that salon
the time. aThey're recycling and they'rel
doing their own marketing, and
it's just building this kind of microeconomy that's at the base
of the pyramid, really. >> Katherine I'm going to hand
the mic off to a student in just
As you were talking, and this seems to be a good segue to this
question, I was thinking, do you
those five people or is it truly ever facilitate helping find
known, worked with, in some way five peopengaged with?ve already
Katherine Rosenberg: We never put five together.
Especially in the beginning when
have one person or two people walk in together in the morning
and then three people in the
really common to us that you afternoon and while it seems
five together, Yunus really wfound that that doesn't work
because it is really based on trust.
And people need to know one another, and they need to have
that cohesive group from the
strangers. beginning as opposed to
model is that it's a very public One of the pieces of the group
So if I'm late repaying my loan one week, Seema is going to know
that I'm late repaying my loan. And Seema is not financially
responsible at all for my loan, but she's going to say,
Katherine, why do you not,
business? Were you sick or did something
happen? And maybe it's a marketing issue
and she's going to say, you shouldn't be selling ice cream
on 181st and Broadway because there's that Haagen Dazs across
the street. You should really be selling it
on 191st because I saw this other guy who was on 191st and
he was making a killing.
And then there's just so many Spieces to the model that it'sr.
hard to get it all in one conversation, but one of the
reasons, our biggest complaint
haven't given them enough money. from our borrowers is that we
although it's enough to get So businesses started, buton,
everybody wants more money. About 95% of people, of our
borrowers that take a first loan, take a second loan.
And the way the group model is
individual, or Victoria or built is that if I, as an
perfectly after the first year, you can get up to 10% more on
your second loan. If your entire group of five
repays perfectly, you can get up
loan. And then what we do, not to
complicate things even more, but
of five together. So we have centers meeting every
single week, and if that center repays perfectly, you can get up
to 20% more on your second loan.
call it peer support, but it's So there really is, I like to
system that everybody knows when really just a peer pressure
to be late because everybody you're late and nobody wants you
I think you might have just answered this question, but you
said it was a maximum of $1,500 for your first time loan, is
that for the whole group or just
can get that much? for one person, like each person
a group of five? And if it is, why $1,500 and why
the hard questions. >>The $1,500 is individual.me
So each person can actually get $1,500, and each person has to
have their own business and has to have their own business idea.
And then the group of five, it's not a magic number.
I think they looked at groups,
developing the Grameen model this was when they were
groups of two as two small, three could have worked, and
then they looked at seven and nine as too large,
and then so the five number was kind of the magic number that
fell out of it which is the history, I guess, behind five.
And then, sorry, what was the final part or was that it?
I think that was it.
Hi, I'm Monique. >> Okay.
the intro video it looks like that your program is empowering
a lot of women, do you see that as a major step as for women
getting a say in what they do?
there's been, actually that's are really great question.
There's a lot of research in the
of women's empowerment that when world of microfinance and sort
all the men in the room, but you actually give, no offense to
woman, the money actually goes when you give to the money the
goes back to the family. and any profit made actually
the form of education. So it goes back to the kids in
terms of maternal care and It goes back to themselves in
family. Whereas, unfortunately, and
again I am just the messenger,
goes more, they'll stop and buy cigarettes along the way, andt
then they'll buy some alcohol,
then by the time they get home a couple beers or whatever, and
the profit that they made. it's like they only have half
not, it is 100% women but it's So our program in America is
wants to go through the program. really just the nature of who
in our door and say, hey, I want So we've certainly had men walk
giving loans at really low a loan like I heard you guys are
And we'll say, that's great but you need a group of five and you
need to meet every week and you need to spend an hour with that
group every week, and they're like no, no, no this is not
happening.
there actually send their wife But in turn, they sometimes
then it becomes this family loan which isn't a bad thing because
and then all those awesome and the money goes to the woman
Seema Gohill: 90% of our things in theory happen.
So that's actually, I think just for the program in the US,
that's actually been very empowering for them as well.
Hi, I'm Marnie. I'm actually from New York City,
and I see, so you guys are
small businesses helping mostly women open these
I see constantly like living like hair salons, etc.
a hair salon goes up there, every week maybe
I'm from Washington Heights, or a little boutique goes up,
it falls down within like or a boa few months.but then
And your program is catering
but how are you helping for these people who are able,
to open these small businesses
success? but then don't really have
look like for you guys? W>> Seema Gohill: Sure.
I think one of the unique parts and one of the reasons that a
lot of these small businesses fail, and not just in the $1,500
range but even the larger businesses in the $20,000 range,
is because they don't have the
And I think the peer model support.
actually provides them with that
or having four other people Sthat you're constantly meetinge
every week, you can go through
you talk to people about it. some of those challenges,
borrowers didn't have any What wsupport before.of our
So if they had an issue with
to go to before. licensing, they didn't know who
other people that they can rely on for that knowledge but they
also have our center managers to
So our center managers we actually provide them with the
resources so they know who to go
issue, whether it's the city to if there is a licensing
government to talk to. government or who in the city
marketing plans, we will provide If it's other solutions like
City small business solutions. them resources for the New York
to a lot of different partners So we can actually connect them
that they on their own wouldn't and resouhave known. the city
So that actually gives them a lot of support and that actually
helps their businesses succeed. So like Katherine mentioned,
Patricia was one of those people
saying she couldn't have done wit, but I think the support oft
the program actually really did help her succeed.
And over the course of the next five years we're hoping to see a
lot more of those success stories.
Katherine Rosenberg: I want to add to that, and I think it
ties into again a little bit of the mortgage crisis, but we're
not giving somebody $25,000 on day one to open a bodega.
We're really starting them from the smallest, smallest possible
rate. So we're going to give them
$1,500 and maybe they'll be able
or an ice cream cart. We're on 207th street in
Washington Heights. So we can appreciate what you're
thinking. And they start small.
And then with that second loan
cart. So I think one of the problems
is people want immediate
open something today and they gratifwant it to be big.ant to
But what we're forcing people to
with this peer lending model is that you need to start small and
you need to grow your business. And you know what, if your
business fails and you only $1,500, that's a lot better than
having a $50,000 loan from a
interest rate and your bodega just kind of went under.
We also help to make sure one of
the borrowers is that if a the processes of vetting with
to her group, hey, I want to be a tailor and everybody says you
have no idea how to sew, that's the worst idea ever.
And that happens a lot. So it's really people
understanding within their
who could be a great community who's good at what and
or in a salon type service. e>> I've had the opportunity to
chat with Katherine and Seema not only today but actually over
the course of the year prior to their coming, and we've been
talking about how Grameen America will grow and expand
over time.
your talking about where you're I nolocated it was New York, of
New York, New York and Omaha. Why Omaha?
Seema Gohill: That was
actually wanting the program a result of somebody in Omaha
The family actually stepped up there.
and fully funded the project
new market it's a little bit of Sa challenge currently is to be
able to fund-raise for that.
the funds available in a market, So to the extent that we do have
program there as well. we can try and replicate the
One of the other things that So Omaha was one of those.
America are doing is developing Kathea partnership with themeen
University of Wisconsin.
the course of the next couple of They're going to be here over
entrepreneurship week and actually meeting with another
class that is doing a project with you right now.
Can you describe that project just briefly so that students
have some context of where we're
partnership with Grameen moving in terms of our
Katherine Rosenberg: Sure. America?
which we're really proud of, and We have a great brand name,
people wanting to bring us to we oftentinew cities.ne calls of
And what we've found is that in any urban environment there's
certainly always demand.
terms of that demand is to And one of our first steps in
do a market analysis. One particular organization haso
asked us to focus on the Native American community, and this is
something that is brand new to
So this is nothing like New York City.
They've asked us to look at reservations and what a Grameen
type model would look like on a reservation.
So Seema and I work in a very small office so what we've
actually asked the students from
take a close look at what a UnGrameen peer lending system is
would look like on a Native American reservation.
And one of the reasons we've
of that population density. sSo, again, I feel like I keepse
saying peer lending model but the idea is that you've got this
group of five, and in Bangladesh
it might be a thousand people in you've got this rural village,
middle of nowhere, but you've igot five groups of fivehe
or ten groups of five.
out to that village he can So when a center manager goes
over the course of an hour, an actually meet with 50 people
And then he gets on his Moto and hour and a half.
he meets with another hundred he goes anopeople.ve miles and
So at the end of the day he's met with a hundred
to two hundred people.
we've really focused it, and in Omaha, we've really focused it
on these urban areas because we know we can work with densely
populated populations where we
New York City apartment but we can't get a hundred people in a
then you walk five blocks and cthen you've got another 25.nd
So that's why the idea, this
American reservation is really concept of working on a Native
jump into without knowing too somethingmuch about it. want to
So we've had our Wisconsin
talk to a lot of local leaders team do a market analysis,
communities and see whether this is something they want,
and whether it would actually work in a population like that.
And, of course, we're talking about Grameen about other
projects that Wisconsin students
work on, not necessarily just in will have the opportunity to
microfinance club on campus that a class but, in fact, there is a
you to talk about what they want is also going to be meeting with
We've talked a lot about Grameen to embark on next semester.
version, and obviously that's Amwhat you represent.tic
I don't want to put you on the
looking at the map of the world and where else Grameen is now
situating itself, are there other anecdotal stories that
you're finding coming out of
places that you're opening up operations that are interesting
lessons to learn? >> Katherine Rosenberg: I think
the most interesting is that it works no matter where you go.
And that's everybody's challenge
in Bangladesh and it worked in is that just because it worked
work in New York City. East Africa, it's never going to
to New York City. AAnd then all the sudden it'so
working in New York and it's
it's working Bangladesh. working in East Africa, Zambia,
which is amazing. ASo you've got these completely
different cultures that everybody says it won't work.
And so we're going to step by step and we're saying we'll just
take it slow and we'll prove you
are people and it's just really wronga social experiment.ople
Seema Gohill: I think that
concept as well. ties into the entrepreneurship
every country in the world has Because if you think about it,
Whether it's at the $1,500 level budding entrepreneurs.
there are people all over the world who want an opportunity.
So I think that's one of the
country you go to you're going biggest lessons is that whatever
will embrace the opportunity, and that's all that they'ret
asking for. I think one of the things is
also the concept of sustainability and charity.
I think one of the reasons that we can't work or this question
of the Native American
we want to be sustainable. communities came up is because
perspective, you could service So you could, from a charity
sustainable to be able to do that area, but will it ever be
struggling with and that's what the students are helping us out
with. >> I'll ask one final question
unless I see a hand.
but you're both very early in your careers and you're workingt
for, as you said, a very highly branded nonprofit organization
that obviously you both have
with that, what do you think significant responsibilities
doing today? helped you get to what you're
this group that are interested We have a lot of students in
well as working in nonprofit in social entrepreneurism and as
So from your perspective, what organizations.
of an industry or where you were helped you in moving maybe out
Seema Gohill: I'll start. I think it's persistence.
I think one of the things that, just looking around over the
last few years, one of the
the entire social business things that I'm inspired by is
And there are so many people movement I think is amazing.
that I'll look over across the that now from an age perspective
graduated a couple years ago but table and say, wow, you just
that you're running and that's you suddenly have this business
From a personal standpoint, I did go down the corporate route
and I did do that for a few years, and what I always found
was that I wanted more
a very entrepreneurial approach responsibilto things.ted to take
And sometimes I felt that in a
lost in that shuffle. corpoAnd so I did look to,f get
microfinance was always a passion of mine and so I did
look to that. It was really persistence that
gets you in the door. I think you kind of have to
narrow it down what you're
industry that you're interested in and then look at players outd
there and then just really go after it.
I don't think, there's a lot of organizations out there that do
great work and I think everybody
and I think that is is revery helpful too.talent
Katherine Rosenberg: I
I also think you can kind of, twhether you're going to be an.
entrepreneur and you're going to
you're going to be your own best start your own business or
an interview or identify a advocate, you need to walk into
what I think you need, whether company and say, hey, this is
you need to kind of sell it. that's a job posting or not and
in a very small office in terms of the headquarter office butk
one thing that we always say is that if there's a project in our
office and you're coming to interview and you're coming to
talk to us, if there's something
let us know because Seema and I don't have time to do but if you
guys want to do it and you're a social entrepreneur and you can
sell yourself and sell that project, that's the best way to
sort of work into that field. And you really are your own best
advocate. >> Your final slide suggests
that maybe you'd like to say
get involved. >> Katherine Rosenberg: Yeah.
So we just launched this really fun Grameen university campaign
which is a grassroots project.
25 universities signed up We'across the country.out
And we're really engaging with
a Madison representative to talk those universities, and we have
about domestic microfinance. about microfinance and to talk
we didn't really talk about was I tjust this broad scope ofhat
domestic microfinance or
And we'd love to kind of talk to microfinance in general.
you guys be our ambassadors on the campus or as you get out
into the working world and
America because we're just one talking about, not only Grameen
know what social business is, get to know what microfinance is
and obviously talk about
But if you guys are interested, you can certainly talk to me and
I can connect you with Megan
All right, well I know the who is the leader on campus.
very much for traveling in students join me thanking you
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